The fight against climate change is a "fundamental duty" of central banks - Villeroy of the ECB

LONDON, April 24 (Reuters) - French central bank governor François Villeroy de Galhau pushed back on criticism of central banks' growing involvement in the fight against climate change, calling the issue "inevitable." "Climate-related risks are clearly among the long-term risks that financial institutions are exposed to: monitoring these risks is not a 'nice to have' or part of a CSR (corporate social responsibility) policy, but a 'must have,'" said Villeroy, who is also a member The Board of Governors of the European Central Bank, speaking at the City Week conference in London. Addressing some recent concerns expressed by a number of leading central bankers, he added that central bankers should not waste too much time in legal and political debate about central bank mandates. "The main mandate of central banks around the world is price stability, and climate change is already affecting price levels and activity," Villeroy emphasized. “It's not mission creep, it's not politicizing our mandate — it's our core business and our core duty.” The debate over how much influence central banks can have on climate change has become increasingly divisive this year. In January, US Federal Reserve Chairman Jerome Powell said she should "stick to her business" because she "is not a climate policy maker and never will be". Since Republicans took control of the House of Representatives, the Fed's balancing act has become more nuanced, although both Belgian ECB policymaker Pierre Wunsch and former Bank of England chief Mervyn King have also said the fight against global warming is primarily the job of governments. But Villeroy, who has long been a strong advocate for doing more, urged central banks and others to come up with better models of how climate change is likely to alter economies. He said recent "pilot stress tests" had been carried out and pointed to the need for shorter five-year scenarios as climate change accelerates. The Greening the Financial System Network, which includes most of the world's central banks and multilateral lenders such as the International Monetary Fund, would therefore publish a "conceptual framework" later this year, he added. It also aims to publish short-term climate change scenarios by the end of 2024, which should show more adverse developments, incorporate harsher "shocks" and directly examine the potential effects of climate change on inflation. (Marc Jones, REUTERS)